September 2009 investment climate 50356 IN PRACTICE INVESTMENT POLICY AND PROMOTION no. 6 Investment Promotion Essentials What sets the world's best investment facilitators apart from the rest Celia Ortega More than 70 percent of investment promotion intermediaries may be Carlos Griffin missing out on foreign investment by failing to provide investors with Celia Ortega (cortega@ accurate and timely information, according to the Global Investment worldbank.org) is an Investment Promotion Benchmarking 2009 report. This function, known as Promotion Officer. She is primarily involved in project "investment facilitation," is one of the simplest and most cost work in East Africa and effective, yet it is neglected at many agencies. A new survey by the in product development for the Investment Policy and Investment Climate Advisory Services of the World Bank Group has Promotion team. Carlos Griffin identified 14 common practices of the top-performing agencies in the (cgriffin1@ifc.org) is a consultant on investor facilitation and benchmarking study. Weaker performers can inexpensively implement aftercare to the Investment many of these practices to win a larger share of the trillion-dollar Policy and Promotion team. market for foreign investment. The authors gratefully Most governments depend on investment World Bank Group with funding from the multi- acknowledge the insights promotion agencies, economic development donor FIAS platform, undertook a second, survey- provided by Dermot Coffey, boards, industrial development agencies, and based study of 96 GIPB-ranked IPIs. This survey Valeria Di Fiori, Armando other investment promotion intermediaries was designed to identify priorities and practices Heilbron, Eduardo Hernandez, (IPIs) to compete globally for critical foreign shared by top-performing IPIs but lacking among investment and the development benefits it the weaker IPIs. A comparison of the 33 top- Kusisami Hornberger, brings. The Global Investment Promotion ranked IPIs ("top IPIs") with a sample of IPIs from Karin Millett, Charles Ng, and Benchmarking 2009 study empirically assessed the bottom half of GIPB ("weak IPIs") uncovered Robert Whyte. 213 IPIs in 181 countries, yielding a ranking of 14 essential practices for effective facilitation. The effectiveness in investment facilitation. Using a 14 practices described in this note were evident This note was developed by methodology pioneered by the Multilateral among the top IPIs but much less so among the the Investment Policy and Investment Guarantee Agency (MIGA), the weak IPIs. These practices relate mostly to priorities GIPB study evaluated each IPI's ability to meet and management, and offer governments low- Promotion team of the World the informational needs of potential investors cost, high-impact pathways for reform. Bank Group's Investment during the site-selection process, based on IPI Climate Advisory Services. responses to two simulated inquiries and the The world's top-performing IPIs distinguish The team advises governments effectiveness of its Web site. themselves by fostering a private sector-minded on attracting and retaining culture, accumulating deep business knowledge, investment in order Building on this wealth of information, the and implementing internal systems that ensure Investment Climate Advisory Services of the the agencies can provide foreign investors with to create jobs and foster economic growth. the necessary information to influence their have a natural tendency to be task- rather than investment decisions. These three areas encompass customer-oriented. Top IPIs face this challenge by the 14 essential practices identified by the survey hiring staff with private sector experience. Seventy- (see Box 1). four percent of staff members at top IPIs have private-sector experience, more than double the percentage at weak IPIs. This is a crucial dimension Foster a private sector- in understanding the needs of private companies, minded culture projecting the professionalism they will trust, and convincing them that a location best meets their 1. Private sector experience. One of the great requirements. These facts have made private sector challenges of public sector IPIs is to understand marketing experience and industry knowledge key private sector service standards. Public agencies hiring criteria for investor-facing staff at Ireland's Industrial Development Agency (IDA), a best- practice IPI for many years. While this is true of the rank-and-file staff, it is even more evident among the managers and board Box 1. Checklist: 14 Steps to Becoming a members who lead IPIs. For example, CINDE, Top IPI in Investment Facilitation Costa Rica's IPI, is led by a former executive of Intel, arguably that country's most important foreign investor. In defining the country's value Foster a Private Sector-Minded Culture proposition, she brings special knowledge and 1. Build a staff with public and private sector experience. understanding of those factors that in practice 2. Offer salaries and bonuses closer to private sector standards. affect company decisions to invest, expand, 3. Secure operational freedom and high-level reporting channels. diversify, or disinvest. In articulating that value 4. Establish and concentrate efforts in a few priority sectors. proposition to investors, she knows which bits of 5. Coordinate facilitation with networks and partners information are most needed to make a business case and what kind of marketing will resonate with subnationally and overseas. investors. 6. Maintain English-speaking staff in sufficient numbers and with the full range of facilitation skills. 2. Salaries and bonuses. A demand for private 7. Continually train and develop staff, especially in soft skills. sector experience puts public IPIs in competition with private sector firms for talented staff. Accumulate Deep Business Knowledge Consequently, nearly all of the top IPIs (83 percent) offer salaries above public sector levels, 8. Establish a minimum level of in-house research capacity. including 23 percent that pay at private sector 9. Develop account managers into reservoirs of knowledge on levels. A large majority of weak IPIs (62 percent), particular sectors. on the other hand, pay only at public sector levels. 10. Ensure the accumulation of knowledge and its relevance. Some IPIs, such as Invest in Bogota, follow the Implement Internal Systems for Consistently Good Facilitation private sector practice of offering performance- based bonuses. If a staff member exceeds goals and 11. Make facilitation a priority within the overall strategy, including gets positive assessments from customers, a very by training and dedicating an adequate proportion of staff. clear-cut bonus formula rewards the employee 12. Maintain the equipment and practices to be easily reached with up to 25 percent of his or her annual salary. and to quickly return calls and e-mails. The transparency of the performance indicators 13. Demonstrate professionalism and dynamism through the Web and bonus formula allows staff members to know site with frequent news updates of importance to investors. when they are on track for a bonus and how much it will be. 14. Follow detailed guidelines on the content, style, timeframe, and quality assurance of inquiry responses. In the absence of sufficient resources, some top IPIs have found other ways to recruit and motivate IN PRACTICE INVESTMENT POLICY AND PROMOTION 2 talented staff. CzechInvest recruits very young enabled it to resist such "mission creep," into staff, looking for people with quality university export promotion, for example. degrees, just a couple of years in the private sector, and personalities suited to communications, Nearly half of the weak IPIs are subunits of marketing, and teamwork. This young, talented, ministries. Such ministries typically have and energetic staff is motivated by the prospect of responsibility for several other economic mandates, quick promotion, high levels of responsibility such as export promotion, tourism generation, relative to their experience, and an annual, small- or medium-sized enterprise development, performance-based competition for a full and investment regulation. Under such a structure, scholarship to obtain a master's degree in business often investment promotion officials do not have administration (MBA) at a well-respected the resources, policy support, or strategic freedom university. to achieve substantial goals. Among the top 33 IPIs, only 7 operate as ministerial subunits. IDA, on the other hand, benefits from an internal culture and external reputation as an agency that is IPIs within a ministry may also suffer from unique within the public sector for winning job- politicization. In one recent case, an IPI's chief creating investment in a highly competitive executive campaigned with the minister of environment. The exceptional personal satisfaction economy for his party's reelection, touting the jobs IDA staff derives from this sense of contributing to and growth generated by the IPI under that the economic development of Ireland is also a administration. Had that party lost, there would powerful motivation. have been a real danger of the IPI and its management being out of favor with the new 3. Operational freedom. The most successful IPIs administration. are given focused mandates and then allowed to pursue them through results-oriented strategies Politicization can be more subtle and even well with minimal interference and the freedom to intentioned, such as when an IPI is prevented from allocate resources accordingly. This autonomy focusing on just a few high-potential sectors for helps to preserve a private sector-like clarity of fear that domestic stakeholders in other sectors mission and means. might feel discriminated against. Equally promoting all sectors may sound fair in principle, Although 73 percent of top IPIs are purely public but a lack of targeting can spread an IPI too thin, bodies, only about three in ten of these are forcing it to expend resources on low-potential ministerial subunits. The rest are autonomous sectors and reduce promotion of high-potential public bodies, which are mostly positioned outside sectors. of ministries and report directly to a minister or higher authority. For example, the chief executive 4. Strategic focus on a few priority sectors. of Invest in Turkey reports directly to the prime Although good IPIs respond to every inquiry, one minister, meeting every two or three weeks to of the most widely shared characteristics among discuss investment opportunities and remedies for top IPIs is that they have identified a few priority obstacles to investment. This allows for more sectors on which to focus the bulk of their focused strategy development and autonomy to promotion and facilitation efforts. This approach is implement than in most ministerial subunits. essential in permitting the development of the deep business knowledge required to understand Twenty-seven percent of top IPIs are wholly or and speak to the needs of specific investors. partially private. One of these, Invest in Bogota, receives half of its funding from the city's chamber In developing a well-considered list of priority of commerce, and five of its nine board members sectors, IPIs need to determine what the country are from the private sector. Because Invest in has to offer new foreign companies and the benefits Bogota is successful in investment promotion, the country hopes to realize from their investments. there may be temptation within the government to Commonly sought benefits include jobs, specific widen the agency's mandate to include other public skills, access to technologies and markets, functions. However, its mostly private nature has leadership in a certain industry, improved global IN PRACTICE INVESTMENT POLICY AND PROMOTION 3 economic integration, fuller utilization of investment promoters allows for specialization and particular resources, and an enhanced image or geographic focus, as well as a cost-saving division international reputation. of labor. At least 76 percent of the top IPIs fit into one of three categories: Clear priorities set the foundation for an IPI strategy and its allocation of resources. In fact, · Subnational agency every top IPI responding to the survey said it · National agency with subnational offices prioritizes inquiries according to their potential · National agency in a country with separate value. This ensures that with limited time and province-level agencies, including special resources, the staff focuses on delivering the most economic zones impact (see Table 1). The 24 percent of top IPIs that do not fit into these 5.a. Networks of subnational agencies and categories are in countries with small land areas or offices. Just as being outside of a ministry supports populations of 0.8 to 5.2 million. Coordination strategic focus, being inside a network of among national and subnational offices allows staff at the subnational level to focus even more narrowly on developing specific subsectors or filling individual economic zones. At the national Table 1. Strategic Focus: A Basis for level, staff can make referrals to subnational experts Success in Investment Facilitation when an inquiry does not fall within the national IPI's purview or priorities. It can be a tough decision, but deciding what sectors to focus an IPI's scarce resources on is the first step in successfully promoting them. Nearly without Four of the top 33 IPIs are in the United Kingdom. exception, the top 33 IPIs (25 national, 8 subnational) have targeted specific The large economies in London, Scotland, and priority sectors and prominently display them on their Web sites. In most Manchester led naturally to the creation of cases, a visitor can access a list of priority sectors in two or fewer clicks, and dedicated agencies, with national coordination one more click will offer the visitor detailed information on the costs, springing up in response. Today the national advantages, and procedures for investing in each. Here is a sample of five top agency, UK Trade and Investment, and 12 IPIs, the way they present their priorities on their Web sites, how many subnational agencies meet regularly to review priorities they have, and what those priorities are. coordination of issues and discuss approaches and concerns. A 2007 agreement sets out shared Number of Agency Web Site Priority Sample of Priority Sectors objectives, mechanisms for coordinating strategy, Heading Sectors and responsibilities for service delivery. Newer or less well-funded IPIs may find it difficult to closely Invest in France Agency Key Sectors 9 Aerospace, agribusiness, health, coordinate strategy and capabilities, but they can information and communications technology, shared services identify potential partners and work toward more synergies over time. PRONicaragua Investment 6 Textiles and apparel, tourism, Opportunities contact centers and business A more integrated form of coordination is the process outsourcing, light hub-and-spoke network, in which the national manufacturing and assembly, agribusiness, forestry agency receives inquiries and channels them to the best-suited regional agencies. This system faces two Hungarian Investment Priority 8 Automotive, biotech, electronics, basic challenges: i) ensuring that the subnational and Trade Development Sectors logistics, research and agencies keep the national agency updated on their Agency development investment opportunities and conditions, and ii) Invest Hong Kong Business 9 Financial services, business making sure that the national agency fairly Sectors professional services, technology, channels inquiries to the subnational regions. consumer retail services Invest in Spain meets these challenges with an online "bidding" system that informs all 17 Botswana Export Sectors 5 Leather, textiles, glass, beef, subnational agencies of new inquiries and the type Development and information technology Investment Authority of information needed. Invest in Spain receives responses from those interested in attracting a IN PRACTICE INVESTMENT POLICY AND PROMOTION 4 particular investment, checks them for language of business. Ninety percent of all the IPIs completeness, and passes them on to the investor. surveyed report that English is the language used Once a region has "won" the opportunity to pursue most often in the investor inquiries they receive. the investment, the investor deals directly with its agency, although Invest in Spain maintains contact For IPIs in countries without the benefit of mass with both parties to ensure a successful investment English-language education, managers should process. ensure that at least a small core of staff members can communicate effectively in spoken and written 5.b. Networks of overseas offices. Eighty-one business English. Such is the case of Senegal's percent of top IPIs, including five of the eight APIX, where the CEO and all investment subnationals, have established their own offices promotion officers are fully fluent in French and near concentrations of potential investors or have English. dedicated staff in their countries' embassies and consulates. Particularly when this staff reports This can be a challenge in developing countries directly to the IPI (rather than to a ministry or with strong linguistic and historical ties to a large ambassador, for example), these arrangements have source country for investment, such as France in the advantages of: the case of Senegal. Such ties can make an IPI complacent in its pursuit of the much larger · deepening IPI knowledge of targeted number of investors who conduct their business in markets; English. It is worth noting that 18 of the 20 lowest · developing many more face-to-face ranked IPIs in the GIPB study are in countries relationships; where English is at best a third language. · allowing more frequent visits to investors; and, Beyond English fluency, some IPIs find it · improving responsiveness to inquiries. strategically advantageous to accumulate a pool of communication skills specific to their target Eighty-five percent of the survey's top IPIs said markets for foreign investment. The Austrian that their overseas offices respond directly to Business Agency not only makes its Web site investor inquiries. This permits quicker response available in seven languages, it has staff who can and follow-up by phone or in person. respond to inquiries in those languages, including Chinese, Japanese, and Russian. These languages The obvious disadvantages are the cost and are spoken in countries that are important sources difficulty of supervising distant staff. Invest Hong of foreign investment, but they are not widely Kong keeps costs lower by using local site location spoken outside those countries. Thus, agencies consultants in target markets to handle inquiries in proficient in these languages have an advantage in those countries, as well as to generate and follow marketing to them. up on leads. However, effective communication and The management of Mauritius' Board of relationship building with investors depends not Investment can count on good performance from only on linguistic understanding, but also on its Paris and Mumbai offices, because they are cultural understanding. Although an IPI's private staffed by senior managers with many years of sector experience helps it to develop a general sense experience and good records on the ground in of how private investors think and what they Mauritius. CzechInvest maintains seven overseas expect, it must also recognize that the investor's offices, but with only one staff member in each. country of origin adds another layer of corporate Although not supervised in person, these staff culture. For example, as PRONicaragua targeted members are motivated by the same prospects of mostly American companies for investment promotion and a scholarship as previously promotion, it deliberately built up a staff with mentioned. personal exposure to the United States through school, family, or work. The result was a marketing 6. Competency in English and other foreign team that was not only multilingual, but also languages. English has become the de facto global multicultural. This enabled the staff to better IN PRACTICE INVESTMENT POLICY AND PROMOTION 5 understand the perspective of American investors building relationships with people in the industry. and the service standards to which they were In this way the IPI can understand the opportunities accustomed. and challenges faced by the companies it is trying to attract. Most IPI employees do not have a degree 7. Continuous staff development. Top IPIs or specialized training in the sectors they serve. recognize that it is not always possible to hire the However, there is a clear difference between the right people; often the right people have to be top and weak IPIs in the tools and practices used to developed. This is especially true for "soft skills" build and manage knowledge. These include that are used in sales, professional presentation, research capacity, the use of account managers, and and customer service. These skills are crucial to systems for the management of knowledge and investment facilitation but rarely taught in relationships. universities. 8. Research capacity. The survey results show that In just the last two years, about three-quarters of for each person employed, top IPIs will have on the top IPIs have trained their staffs in marketing average 1.05 computers with high-speed Internet and investment facilitation, while about 40 percent access. On the other hand, weak IPIs have only 0.6 have provided training in customer service, computers per person, meaning their staff members writing, and research. For example, IDA have limited access to the primary tool for research. acknowledges the importance of staff development by investing significant resources in comprehensive This lower research capacity may reflect cost training, including MBA and executive programs constraints, but also a lack of emphasis by from top international business schools. IPIs with management on the accumulation of sector- and fewer resources, such as PRONicaragua and Invest investor-specific knowledge. An IPI with a lower in Bogota, have sought and obtained training, level of knowledge will misdirect, and therefore including in marketing and customer service, from waste, more energy. Unable to foresee many international organizations and consulting firms. investor needs, this IPI will provide inadequate At Invest in Bogota, this training continues to be responses to inquiries, diminishing investor replicated in-house for new staff. confidence. Those investors that do set up operations in the country will not include the IPI Staff development is a way of raising the IPI's in strategic collaboration for growth and capacity or replenishing capacity after staff diversification, because the IPI brings little to the turnover, but it can also be motivational when the table. IPIs with a low level of industry knowledge staff sees it as a way to build skills and advance will be relegated by their customers to a role of careers. Around 42 percent of staff members at administrative support. both top and weak IPIs have less than two years' experience at the IPI. And, only about a quarter of Every standard function of an IPI requires research, their staffs have more than five years' experience. whether image building, proactive promotion, High staff turnover is a problem for strong and investor aftercare, policy advocacy, or investment weak IPIs alike. The difference is that the top IPIs facilitation. Therefore, each professional staff embrace this fact and cultivate an image as a good member should have easy access to a computer and stepping stone in the careers of talented people. the Internet. When this is not possible, a few staff When former employees of an IPI are highly members should be dedicated exclusively to sought by public and private employers, the quality research with a focus on: of applicants to the IPI rises. · preparing stock profiles of priority sectors and investment sites; and Accumulate deep business · providing a quick turnaround for requests to knowledge tailor stock profiles to specific inquiries. Once an IPI knows its strategic focus, the next step 9. Account managers. Eighty-eight percent of top is to build the deepest knowledge possible of IPIs always have inquiries handled by a single priority sectors through industry research and by person throughout the entire life cycle of the IN PRACTICE INVESTMENT POLICY AND PROMOTION 6 inquiry. Putting a single account manager in charge currency, and confidentiality of information. of each customer enables the IPI to: Five common tools and practices used by top IPIs · build familiarity with potential investors' for knowledge management are: needs and interests, conveying that they are valued and sparing them the need to repeat i. Investor information systems. These may be as their issues to multiple people; simple as shared network drives, where stock · take advantage of and build on the information is available to all inquiry responders knowledge of the IPI's sectoral specialists; on a country's general business climate and its · establish relationships with investors that are industry-specific characteristics. This access allows personal as well as institutional, thereby the responders to quickly assemble consistent, improving information sharing and openness high-quality responses and spend their time to collaboration; and, tailoring the response. As the IPI builds its store of · smoothly advance investor interest through informational material in electronic form, progressive stages of inquiries, site visits, information of general interest may be made negotiations, start-up, and further available online to investors or remote offices. development. ii. Regular staff meetings. The simplest and most It is difficult to imagine investors sharing inexpensive of knowledge management practices is information about their long-term goals, costs, the regular, perhaps weekly, staff meeting. Here suppliers, production processes, and corporate account managers can recount their ongoing trends if they are not personally comfortable with activities with investors, describing opportunities, the IPI staff members who work with them. And, challenges, concrete steps taken, successes, and the IPI's ability to collect this type of information lessons learned. This keeps all staff informed of from the investor directly affects the quality of the individual accounts, allows the account manager to information the IPI can provide the investor. This learn from the experiences of others, and enables investor confidence can best be nurtured by an the staff as a whole to improve efficiency by account manager. The investor needs to know, identifying common issues and approaches. however, that because the account manager Ninety-one percent of top IPIs have regular, team- represents the ideals of an institution, the focused staff meetings, while slightly over half of cooperation and confidentiality established with weak IPIs do. one individual will continue should he or she leave the agency. iii. Databases of available land. Top IPIs understand that for their investment locations to 10. Knowledge and relationship management be seriously considered, they must be able to systems. Beyond desk research and news updates, provide quick, relevant information to potential deep knowledge is acquired through relationships investors on actual land and office space that is with companies and other industry players. As an suitable for their projects in terms of location, account manager builds these special relationships infrastructure, regulation, and incentives. Nearly and knowledge, it is critical to ensure that they all (91 percent) of the top IPIs have their own land become assets of the IPI and not just of the databases or access to databases hosted by partner individual. Considering the high turnover rates of organizations. CzechInvest takes the extra step of many IPIs, it is important to have systems for putting interactive maps of the country on its Web collecting, storing, and sharing information within site. The maps allow visitors to select and view the IPI before it is lost. combinations of transportation infrastructure, sectoral concentrations, and potential supplier Information provided to individual investors may locations. be similar to that requested in other cases. Knowledge management tools allow IPIs to store iv. Directories of business service providers. In and reuse valuable information as it is collected. addition to land, potential investors will often seek This enables partial standardization of inquiry local professional services, including legal, responses, and promotes efficiency, consistency, accounting, tax consultancy, personnel consultancy, IN PRACTICE INVESTMENT POLICY AND PROMOTION 7 construction, and translation. Many top IPIs will dedicated to the smooth entry of foreign investors maintain lists of proven service providers, although into the country. The strict membership they generally refrain from making endorsements. requirements include four recommendations from In the Czech Republic, the Association for Foreign association members, two from multinational Investment is an association of professional service corporations, proof of good financial standing, providers that acts as a single point of contact police clearance of the applicant's agent, and a minimum of three years' experience. v. Customer relationship management software. Box 2. Making the Most of Customer CRM software typically stores key company Relationship Management Software information and records all interactions with that customer. It will remind an account manager of open issues and next steps to be taken. It can IPIs unable to afford specialized CRM software may use less expensive therefore track progress toward goals and often can software such as standard Microsoft Office programs (Excel and Access) generate performance reports. The software used for basic record-keeping and customer statistics. Brazil's APEX has by IPIs tends to be for the front-end, focusing on developed an investor database on Access, and Senegal's APIX relies on the lead follow-up and the tracking of "service tickets" same program for the smooth operation of its one-stop shop. (open customer issues). However, for those IPIs tasked with regulatory or monitoring functions, there is also software for tracking back-end For its lead-tracking, APIX uses ACT!, which is one of the less expensive paperwork and processes. By making sure that an formal CRM softwares and is also favored by PRONicaragua, Invest in IPI "remembers" a company's history in the Bogota, and until recently, CINDE. Now CINDE uses Microsoft CRM, greatest detail and that all open issues are followed as do Invest Hong Kong, Invest in Turkey, and the world's top-ranked up in a timely manner, CRM software makes facilitator, Austrian Business Agency. investors feel better served and more likely to rely on the IPI as a valuable resource (see Box 2). Manchester Investment Development Agency Service uses Evolutive, which is designed specifically for economic development and inward Implement internal systems investment agencies. Although little known in the rest of the world, its for consistently good manufacturer claims that Evolutive is the best seller for public sector facilitation organizations in the United Kingdom. MIDAS' system extends to 10 local authorities, which can access and update news of projects and investors. 11. Making facilitation a priority. In the GIPB results, 70 percent of the IPIs did not respond in the time requested to one or both of two investor As IPIs grow, mature, and diversify their goals, it is natural for them to inquiries. There is no easier potential sale than adapt their CRM software accordingly. CzechInvest started with an Excel when an investor knocks at an IPI's door. And few spreadsheet, later moving to GoldMine software and then to a tailored things are more damaging to an IPI's image and form of Lotus Notes, which is also used by Copenhagen Capacity, the actual performance than giving a first impression world's second highest performing facilitator. Today CzechInvest is of being disinterested or incapable of providing a basic, professional response. Even if the IPI is gradually shifting to web-based applications. unable to respond in detail, professionalism demands that the inquiry be acknowledged. The Most crucially, CzechInvest management ensured that all staff IPI should be ready to make referrals to other communications and goal achievements were recorded within the system. agencies that might help, and it should take If not recorded, they did not count. Similarly, Invest in Bogota's staff advantage of contact with the investor to provide bonuses are calculated based only on information reflected in the CRM any promotional material that might influence the investor's appreciation of location advantages and software. The most common problem with CRM software is that it is not IPI services. used by staff. Without management attention to creating a CRM mindset, it can become a costly tool that is never taken out of the toolbox. The survey evidence suggests that top IPIs and weak IPIs receive about the same number of IN PRACTICE INVESTMENT POLICY AND PROMOTION 8 inquiries per week, on average 18 to 21. However, mobile phone numbers) for each of its industry top IPIs assign about double the percentage of staff specialists. to inquiry handling. Invest in Spain dedicates 20 percent of its staff exclusively to inquiry response, 13. A Web site work plan. An IPI's Web site is and each of Austrian Business Agency's 24-member often an investor's first point of contact with the staff must be prepared to respond to investor agency. Not having one is simply no longer an inquiries and does. option for a serious IPI. The Web site acts not only as a portal for investor information, but also as the 12. Being accessible. In order to request face of the IPI. Keeping information on the Web information from an IPI, an investor must first be site current and relevant is necessary to ensure that able to reach its staff by phone and e-mail. This investors are not misinformed and that the IPI seems an obvious point, but many weak IPIs hurt gives a professional first impression. their chances to make their cases to investors because of one or more of the following: Eighty-six percent of top IPIs update their Web sites more than once a month, and more than half · A Web site with no contact names, numbers, of those update daily. On the other hand, most or e-mail addresses for general reception or weak IPIs do not update their Web sites more often for sector-specific managers and specialists. than every three months. · Receptionists who are unable or unauthorized to transfer investor calls to the staff most able A Web site should include timely updates on new to help investors. regulations, projects, and opportunities. · No chance to leave voicemail or other Copenhagen Capacity posts a monthly newsletter messages. (also available by e-mail subscription) that presents · Use of personal e-mail accounts instead of "the latest news about Copenhagen's business agency-specific addresses. climate, investments, company establishments and developments in our key industries." Top IPIs have three times more telephones per person (0.85) than weak IPIs (0.28), and most Updates also keep promotional material fresh and allow callers to leave a message so that an investor interesting. Invest in Turkey, a top IPI, uses daily only has to call once. When there is no voicemail updates to offer new evidence that its country is a on a direct line, an investor may call several times prime investment location. In 50 seconds, a news while the IPI staff member is away and give up in ticker on the Invest in Turkey home page gives frustration, all without the staff member ever visitors 10 "Breaking News" headlines making knowing about the lost opportunity. Personal Turkey's case (see Box 3). In alerting Web site users e-mail accounts tend to be unreliable because they with fresh information, these updates also act as are often on free public-use systems and business advertisements for the IPI's professionalism and e-mails can be lost among personal and junk dynamism. e-mails or blocked entirely by the provider's spam filters. Most damagingly, the use of personal e-mail conveys an unprofessional image to investors. Personnel made available to answer investor Box 3. Recent Breaking News from the inquiries should be organized according to investor News Ticker on Invest in Turkey's Web Site needs rather than internal, bureaucratic functions. For example, poor facilitators may have a single "Mobile operator Avea opens technopark in Istanbul..." "USD 6 billion investor speak with one person about locations, of agricultural investments on the way..." "Foreign banks make profit in another about incentives, and another about licensing. Instead, an investor should be able to Turkey, while incurring loss abroad..." "Tommy Hilfiger to run Turkish question one person about all the relevant issues. operations independently..." "Turkey, popular destination for heavy Within three clicks from Copenhagen Capacity's construction equipment investments..." home page, investors can arrive at names, photos, profiles, and direct contact information (including IN PRACTICE INVESTMENT POLICY AND PROMOTION 9 14. Response guidelines. All the practices process of inquiry receipt, response, and follow-up described to this point must be integrated into a for the investor (see Figure 1). single, coherent system for the smooth and thorough handling of inquiries every time. To ensure the high quality and timeliness of inquiry responses, most top IPIs employ: A best-practice system will have fixed processes for the channeling of inquiries, updating of · written guidelines for content (84 percent); information, and evaluation and adjustment of · quality control by managers (91 percent); these practices. This cycle translates into a smooth and, · deadlines for submission (94 percent). Figure 1. An Integrated System for Inquiry Handling Best-practice IPIs address the four key dimensions of inquiry handling--availability and contactability, responsiveness and handling, response quality, and ongoing customer care--in an integrated system that is continuously monitored for improvement. Source: Investment Climate Advisory Services of the World Bank Group IN PRACTICE INVESTMENT POLICY AND PROMOTION 10 A good investment facilitator puts a new inquiry agency regularly makes a similar pitch to the through a fixed screening process, or "investor customers of one of Bogota's investors, a call-center scorecard," and assigns it a level of priority. The company. Invest in Bogota has found that helping investor receives an acknowledgement of the investors in this way can lead to job creation in inquiry's receipt and a timeframe for its response. targeted sectors and win investor loyalty for the The inquiry is channeled to the appropriate city. specialist to prepare the response according to set guidelines on content and presentation. The The goodwill generated by this sort of intervention inquiry response is reviewed by a manager and in turn catalyzes another IPI tool for facilitation: approved or returned to the specialist for more investor testimonials. Testimonials (written, video, work. The response is sent and followed up within or in-person) send a powerful signal to potential a fixed time limit. The objective of the follow-up is investors that an investment location is profitable, to move the investor to a next step, such as an in- stable, and even strategic in the views of their peers. person meeting, a site visit, or an introduction to An investor may not ask for testimonials or key officials. When this process ends with the information other than what is necessary for investor taking a next step or declining further financial calculations of costs and revenue. It is up assistance, the manager records what went right to the IPI to master the art of giving investors the and wrong. In a periodic review of the inquiry- information they need--not just the information handling system, these notes, input from staff they request--to choose their investment locations. involved, and investor feedback help identify options for enhancing effectiveness. The tools for handling inquiries are regularly maintained through systematic processes by Invest in Spain provides a good example of how designated staff. Databases and directories are inquiry priorities can be systematically addressed. updated. News on developments in sectors and the The agency assigns a responder according to investment climate is collected and incorporated inquiry categories of Level 1 (general), Level 2 into stock information. When newly facilitated (non-priority sector), or Level 3 (priority sector). A investors launch their operations they are asked for junior officer replies within 24 hours to Level 1 testimonials, which are added to promotional inquiries, using stock information about the materials. Changes in personnel trigger prompt economy, investment climate, and investment updates of contact information on the Web site procedures. For Level 2 inquiries, a senior officer and training on the inquiry-handling system. calls the company within 24 hours to demonstrate Finally, staff members responsible for even a small attentiveness and to collect more detailed part of the system are aware they are being evaluated information on its plans and constraints. The on their contribution to its smooth functioning. resulting compilation of informational material is Managers provide the necessary incentives and set delivered to the investor within five days. For Level priorities to ensure this. 3 inquiries, a sector specialist is assigned to do the same work, but with more research and sector- specific details. Conclusion However, an outcome-oriented IPI must remain Given the vital role that an IPI can play in winning flexible enough to spot opportunities for facilitation foreign investment, there is simply no reason why outside the guidelines. When a European cosmetics an investor inquiry should go unacknowledged or manufacturer in Colombia inquired about the why investors should not be able to get in touch procedures and challenges for expansion, Invest in quickly with an IPI staff member who can help Bogota recognized that the local affiliate was them. Failing to facilitate site selection for investors working to convince its European headquarters with real interest wastes the scarce time and that the Bogota facility was ripe for expansion. resources spent on image building and investor Invest in Bogota offered to make a pitch directly to outreach. Therefore, every inquiry deserves a the headquarters, which helped seal the deal. The response, and making sure each investor gets one is IN PRACTICE INVESTMENT POLICY AND PROMOTION 11 IN PRACTICE essential to the IPI's reputation for professionalism. References Those practices that set the world's top facilitators FIAS. 2009. "IPI Characteristics Survey: Providing The Investment Climate IN Information to Potential Investors." Unpublished survey, apart from their competition relate more to the PRACTICE note series is published priorities and internal systems that create an FIAS, Washington, D.C. by the Investment Climate enabling environment than to financial resources. Investment Climate Advisory Services. 2009. Global Advisory Services of the World In fact, many IPIs may be able to improve their Investment Promotion Benchmarking 2009: Summary Report. Bank Group. It discusses practical country's share of the trillion-dollar global market The World Bank Group, Washington, D.C. for foreign investment simply by making considerations and approaches facilitation a top priority. By focusing facilitation UK Trade and Investment. 2006. "National Framework for for implementing reforms that efforts on a few priority sectors, dedicating a few Joint Working between RDAs and UKTI." https://www. aim to improve the business people to research in those areas, mapping out an uktradeinvest.gov.uk/ukti/appmanager/ukti/ournetwork?_ environment. The findings, inquiry-handling system, and evaluating staff nfls=false&_nfpb=true&_pageLabel=england. interpretations, and conclusions specifically on facilitation, an IPI has already taken included in this note are those of a big step toward good facilitation. the authors and do not necessarily Over time and without additional resources, an reflect the views of the Executive IPI can further develop an enabling environment Directors of the World Bank or the by recruiting staff members on the basis of their governments they represent. soft skills, private sector experience, and language proficiencies. It can implement rudimentary knowledge-building techniques such as staff About the Investment meetings, shared computer drives, and training of Climate Advisory incoming staff on internal systems and priorities. It Services can reach agreement with similarly mandated institutions subnationally and overseas to The Investment Climate Advisory coordinate investor facilitation. Services of the World Bank Group With a small, additional investment, more helps governments implement telephones and computers can be made available, reforms to improve their business and bonuses or supplemental salaries can encourage environments and encourage and the competitive spirit needed to win investment in retain investment, thus fostering today's very competitive international marketplace. competitive markets, growth, and Finally, success in facilitation may earn an IPI greater autonomy and the freedom to set sectoral job creation. Funding is provided priorities and budgets for personnel and by the World Bank Group (IFC, equipment. Success breeds success, and the right MIGA, and the World Bank) and focus with the right internal system is enough to over 15 donor partners working kick-start this virtuous cycle. through the multidonor FIAS platform. WWW.WBgINvESTMENTClIMATE.oRg